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Airbnb, eBay, Vinted and other apps to share more information with HMRC

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Are you raking it in selling clothes online? Is letting out your spare room proving a nice little earner?

People who make money from online "side hustle" activities like these will find the tax net tightening this year.

From 1 January firms including Vinted, Airbnb, and eBay are obliged to collect and share details of such transactions with the tax authorities.

That will allow HMRC to home in on anyone who should be declaring the extra income but isn't.

While HMRC was already able to request information from UK-based online operators, from the start of this year there are new rules that the UK has signed up to via the international body, the Organisation for Economic Cooperation and Development (OECD), as part of a global effort to clamp down on tax dodgers.

The new rules require digital platforms to report the income sellers are getting through their site routinely. It will apply to sales of goods such as things that have been handcrafted and second-hand clothes, but also services including taxi hire, food delivery, freelance work and short-term accommodation lets or even renting out your driveway for parking.

The information will be shared between countries that have signed up to the OECD tax rules.

The government said the new rules would help it "bear down on tax evasion", as sellers on digital platforms would now be treated more like traditional businesses.

An HMRC spokesperson said: "These new rules will support our work to help online sellers get their tax right first time. They will also help us detect any deliberate non-compliance, ensuring a level playing field for all taxpayers."

Firms' first obligation to report information to HMRC will be at the end of January 2025 and will include information such as the tax ID, bank account details, and the value and volume of transactions for sellers whose activity is of significant enough size.

People who are just selling a few bits and bobs out of their wardrobes are unlikely to have to pay tax, since they are not considered to be trading for profit. However, someone who buys old clothes planning to resell them online, may be liable.

What do I need to do?

  • Online sellers already paying tax do not need to alter what they are already doing
  • Individuals have a £1,000 tax-free allowance for money made through property
  • There is also a £1,000 allowance for "trading" income - for example, if you offer tutoring or gardening, or if you are selling new or second-hand items online
  • People earning below those thresholds may not have to fill in a tax return, but should keep records in case they are asked for them

Adam Jay, chief executive of the second-hand marketplace platform Vinted, told the BBC he did not believe the new rules would affect many of the site's sellers.

"It's actually quite a small proportion of users of our platform who will trigger this threshold where we need to provide information," he said.

Under the rules set out by the OECD, firms will not be asked to share data about sellers who make fewer than 30 transactions or €2,000 (£1,735) a year.

"It's only those people who are making a profit from selling second-hand items that might be eligible for tax and then it's about their own personal tax situation what tax would ultimately be due to HMRC," he said.

"We'll be actively reaching out to those sellers explaining what the new requirements are why they exist."

Emma Rawson, tax expert at the Association of Taxation Technicians, told the BBC's Today programme that the new rules could still put off some people who might be wary of incurring taxes by clearing out their loft and selling things online, or making money from a craft hobby.

The key things to think about, she said, were whether or not what you were selling amounted to a "trade", where you might proactively be buying clothes to sell on, for example, and how much you earn.

She said that anyone who thinks they could be earning above the minimum £1,000 trading allowance should contact the tax authorities.

"Don't wait for that letter to come through, or for HMRC to contact you," she said. "It's always better if you think there may be tax for you to pay to declare that upfront as there may be penalties involved if not."

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